Liu Hsiao-ling, a Taiwanese woman, holds up her health insurance 'smart card' that contains all her medical history. The cards help Taiwan maintain some of the lowest healthcare administrative costs in the world.

Taipei, Taiwan — When Liu Hsiao-ling's husband was diagnosed with cancer, the benefits of Taiwan's national health insurance system became clear to the couple. He received in-home care for the last 20 days of his life, and the Taiwan government paid most of the bill.

"Before he passed away, he received very good care, and it wasn't very expensive," says Ms. Liu, as she rested in a hospital lounge here after picking up her medication. "The doctors here help you clearly understand the situation, and none would say, 'because you haven't paid, we can't help you.' "

Liu is one of an overwhelming majority here – nearly 80 percent of Taiwanese, according to a poll last year – who say they're happy with the island's national health insurance system.

But what's remarkable is that Taiwan's system is also comparatively cheap: Taiwan spends 6 percent of its GDP on healthcare, compared with the US's 15.3 percent. Experts say the key to that number is the combination of a single-payer system with world-beating healthcare technology.

Taiwan launched its single-payer system (meaning that only the government reimburses doctors and hospitals) in 1995. A "smart card" was introduced nine years later.

More than 99 percent of Taiwan's 23 million people are covered. Each of them has a card with basic identification and medical data. When a Taiwanese patient goes to a clinic or hospital, a swipe of the card gives the doctor instant access to that data. And information on the visit is uploaded to a central database that gives the government a near "real time" picture of health patterns.

"IT [information technology] has become the backbone of our daily operations, and it's one of the reasons why we can keep administrative costs so low," says Michael Chen, vice president and CFO of the Bureau of National Health Insurance. "Those costs are now 1.5 percent of total medical expenditures – that's probably the lowest in the world."

The single-payer system is an ideal fit with such a card, says Mr. Chen, because the government can keep information on one unified database for nearly all Taiwanese.

In other countries, each insurer keeps separate databases, which often can't talk to one another.

The card and database system means Taiwan's government can quickly spot abuses of the system and track epidemics such as swine flu.

For example, the government can tag a list of passengers who were on the same flight as someone later diagnosed with swine flu. If any of those people have their card swiped, their doctor can immediately inform them they may be at risk. And the government will know within an hour where the person is, so it can impose a quarantine or take other appropriate measures.

That may sound a tad Orwellian to American ears. But Chen says they did take privacy concerns into account. For example, in order to access medical information, a doctor's card and clinic or hospital's card must also be swiped, along with the patient's.

The card-and-database system has won praise from outside experts. "Taiwan's system has incredibly powerful information technology," says Cheng Tsung-mei, a health policy expert at Princeton University. "That gives them such efficiency."

Still, Ms. Cheng and others say Taiwan's system isn't perfect. Insurance is underfunded and overused, with many elderly Taiwanese crowding into clinics and hospitals far more often than needed.

Many say there's not enough spending on research and development. And fee-for-services schemes are still used for most procedures, skewing doctors' incentives toward quantity over quality, critics note.

Taiwan hopes to address those issues in further reforms, and make its "smart card" even smarter by bundling it into an all-in-one transportation and health services card.

For normal Taiwanese like Liu, though, the government's already doing a pretty good job. "I'm very satisfied," she says.